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The GONZO partnership is owned by five equal partners: Gary, Ophelia, Nancy, Zoe, and Olivier. The...

The GONZO partnership is owned by five equal partners: Gary, Ophelia, Nancy, Zoe, and Olivier. The partners are considering entering into a buy-sell agreement to establish an orderly transfer of the ownership interest in the event that one of the partners were to die, become disabled, or retire. Which of the following statement is (are) true regarding their options for the buy-sell agreement? 1.If they establish a cross-purchase agreement and fund it with life insurance, 20 policies will be needed. 2. If they establish an entity purchase agreement and fund it with life insurance, five policies will be needed. 3. If they establish either a cross-purchase or entity agreement and fund it with life insurance, the premiums paid on the policies will be tax deductible as a business expense. 1 and 2 2 and 3 1 and 3 1 only.

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